Eastman Chemical (EMN) 1 May 202020 Q1 Earnings call transcript

Company Profile

Participants

Gregory Riddle	VP of IR & Communications
Mark Costa	Chairman & CEO
William McLain	CFO & Senior VP
Vincent Andrews	Morgan Stanley
Jeff Zekauskas	JPMorgan
Frank Mitsch	Fermium Research
Alex Yefremov	Keybank
David Begleiter	Deutsche Bank
Eric Petrie	Citi
Duffy Fisher	Barclays
Matthew DeYoe	Bank of America
Kevin McCarthy	Vertical Research Partners
Matthew Blair	Tudor Hold
Mike Sison	Wells Fargo
John Roberts	UBS

Call transcript

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, everyone, and welcome to the Eastman Chemical First Quarter 2020 Conference Call. Today's conference is being recorded. This call is being broadcast live on the Eastman's website, www.eastman.com.

We will now turn the call over to Mr. Greg Riddle of Eastman Company Chemical, Investor Relations. sir. ahead, go Please

Gregory Riddle

and everyone, Molly, joining thanks us. good Thanks, and morning, for Okay.

new with Mark to CFO; today and the market case me On call yesterday it, are Manager, Relations. McClain, after the Vice filing, for www.eastman.com. you and related slides first missed financial LaRoe, in news CEO; Senior results posted hope Costa, website, I President quarter and our Jake and release comments us, we Investors addition and in it's XXXX close, Investor In our This you. of is and SEC X-K to section Willie prepared helpful Chair Board

Now before two items. begin, cover I'll we

could the expectations in including company's the and the first certain this slides prepared be First, statements Actual plans the XXXX. be call, concerning during differ Form during Form XX-Q are XX-K detailed factors in and the and in financial our XXXX results expectations. Securities year materially. to filed related or first for presentation, this to Certain will remarks, XXXX release will future quarter hear news results for full forward-looking with and quarter or and you preceding Exchange filings events filed our Commission,

With financial turn are be news call can disclosures, that, in financial full associated release, other this a the earnings and year. effective quarter website. to the and used Mark. Reconciliations tax non-core the the Second, in on measures in presentation adjusted description including for results and to referenced directly I'll adjusted our tax forecasted rate certain over exclude found available unusual GAAP comparable rate items using and of the most first the excluded items, which

Mark Costa

Greg. Thanks,

now. comments. questions, all right turn I we facing want isn't some ever seen that few a to like to minutes before. unprecedented we've recognize our to challenges make COVID-XX is anything your take world We over Before it

difficult how for you're to by I what affected pandemic, the this For experiencing. must want recognize those be

our and for helping I So and first communities. responders many safe. local helping in in are gratitude time, this express them, us keep difficult community, government my to care too want to health the And

ways keeping Eastman. As while the customers that we've in and mechanics, out products to to importantly, and demonstrated challenge revealed tremendous its said women together our our our going. are characters Eastman our of I to risen adversity day. been to safe, to get through team men come keep It's all and their faced. who've particularly thank plants has and want character every thank We've our our electricians I operations and want families kept operators, everyone our running every

who continuing for Eastman or And to keeping to on are business many and going. the site. from support employees home Thank customers our working you

you and Eastman, my colleagues, So courage, dedication. your your thank at ingenuity, to you, your for

You're difference truly a way. an making material incredible in

Turning to more and flow earnings quarter cash QX. We had generation. even in impressive a strong first free

This starting what quarter between starting have day Eastman war sunlight can and the trade to a escalate. COVID when we to do of moderate demonstrates

predict financial to for the to results difficult COVID-XX, it's all related XXXX. Given extremely uncertainty

So guidance. the to as EBIT the of some did are attribute pandemic. we we impact in see the $XX million decline to withdrawing We impact our $XX million first a quarter

this. of markets Our diverse end mitigated some

we a number While saw impact our stability also of a textiles, in substantial saw transportation markets. and in we other

and expect in transportation, to textiles markets. we increasing forward, energy look see we As challenges

expect of as as impact, markets a providing where personal see a stability, consumer chemicals. construction, we such there consumables, and also markets number durables medical, And mixed ag. We care building and are such industrial

take globe. seeing recovery restart these from China. how with insight in will the across economies we're we of can We can attempt hope what know some None us the actually and to happen

We were growth continue model discipline. restart. in insight having position to strength We our from from a lead are operational far able Europe our of innovation-driven North to and will how and because America

uncertain never in The time, have this been benefits, clearer. especially

an a as portfolio, decisive transforming capability long built this have as innovation track We record of capability. outstanding a specialties. And operational our execution towards well have we portfolio within

taken industry-leading significant to cash which of has sustain balance strong with current liquidity. Eastman flow, environment we this sheet aggressive have actions a and in sources

the addition, incredibly driving growth can innovation-driven in actions have proven end positioned and uncertain are exceptionally control a focused In in well of time, said, to above with weather our businesses we we That environment. this our track specialty record model. are growth markets on this we

taking We previous expecting our are strong significantly expectations. actions, We're be expected and our of million to customer this discretionary leveraging free of realizing with stability reducing current than strong $XXX engagement. our and turnaround We're the spend flow environment, capital adjusting cash working to beyond deferring markets operations year cost end assets. greater source a significant some diverse from demand

million. expectations reduced capital We million $XXX $XXX to of our a $XXX approximately expenditures to million range of by

a will approach cash now substantially than strengthening on and company, you our first dividend with flow. progress capital debt the year. million we be to significant which $XXX disciplined the focus for in in, the the earnings a program, All Finally, great our to made repayment we quarter allocation, can maintain and and greater see evidence expect strong we've

your happy the Operator, With first to now are Willie for questions. we're that, question. and I ready take

Operator

go come Thank from Instructions] Morgan will Vincent of question Please Stanley. Andrews you ahead. first Our [Operator

Your line is open.

Vincent Andrews

if you in I'm happy XX% in the forward March, of see could I good Thank and like just months just morning, your a look other maybe being said, was skim versus first talked them, but and you them. it I everyone. quarter. future. about you're sounds it's I first them with I'm can I'm March How two quarter? just reading down much you down But doing than worse April? April the slides, versus little and prepared overall the did contextualize saw the didn't you But to the bit. Mark, talk happy. remarks, wondering I that

Mark Costa

Sure.

well. across sort of we relatively healthy we flat to are XX% some the There as grouped and quite said stable - about perspective as our markets three you and into them are to sequentially. good being and it's slide, Vincent. So quite well, And in markets you provide categories, doing the really try of sound hear

And a which pharma from well ag, good, markets, And relatively those range of things you've those going all packaging consumables, this. are in parts medical care, adhesives is et things personal The got hold to packaging to in like up polyesters, cetera. nutrition. markets

to that chemicals, to April, still durables, also but more markets okay see of the relatively do you've can in like got building as and they're ones continue expect those transportation, declining, impacted textiles challenged Then electronics, actually where you we somewhat construction, are consumer industrial in sequentially energy. sort to

us are call. a the in there of The helpful diversity really - things. the that continue this mixed harder XX% sort a quarter. what So little three in that impact of is time. especially incredibly to we we are through markets, stability call That And would that end world to expect gives bit

like think that, holding and durables, like some our well, growth. up I to of allowing our innovation a consumer of own Tritan there's create us lot that's things that are and

to of from completed, as to might it's some but is holding as of just et cetera. stability coatings applications. our seeing really well markets, some that's reasonable we're up as be well going moderate expect innovation Architectural in interlayers. existing So not architectural those But projects

shut be starts plants happens to you've think The But fortunately, okay. challenge, which question auto is new plants, real down some I I over the housing. the is And got it's to what longer-term back. tire of well through in going think where coming is in course, world, extremely transportation, QX, then documented, China all

plant, tire out. plant mapping auto every track every the model every window and down to we But all OEM, are that

they're As shut know, all now. you down

we that in back to China U.S. recovery and are they still So a but and And question is Europe the already, see improvement that up? question when mark. is obviously, going start sequential

down, really the trying we to this the conservative. production which earnings more auto So the And for and the opposed an OEM market's OEM consultants be view, predict there. from be down sort say inventory we've range the been on as can to point end inform going the pessimistic of our of of production XX% to that of quarter, strategy point out uncertainty. We've that's is assumed given to at

we in But see our - how very aggressive so And plans we'll it that. recovers. manage for how we've been

say April's indicator of overall, a I'd good quarter. So the

as I May things line think with a challenging being that we back shut up we could start some will degree. us to consultants, more supply expect that it in chain to down. then a with up presume be these the of bit plants that, along to And catches lot

benefit answer Does you'll June. so question? in some see of your And that that

Vincent Andrews

Yes.

bit little between a about down going in just be XQ, about to XX% XX%. XX% and like in right. fair? we Is think May, may a and sequentially recap, April, being saying you're I'm we it in But say probably June. it's sequentially, think be to to down. being So that could worse little It'll sounds if volumes XQ your just better

Mark Costa

mean, I what's yet. we knows and a questions amount happen start for going uncertainty to to that. right? to go that know a want And mean, one when a of range that have don't of emphasize U.S. I lot there's just with. with we just Europe answer no I even that's to are going phenomenal there's everyone, think really here, the restart how to I

cars? the dictate to when are in then but normal back more people a lot start out Travel? it's So up. companies, of restaurants? life retail question going Shop plants their activities? to coming how go are consumers auto plant get don't - behave consumer's a which to going to do, know we stores? back start going up, of can in to Back will work to this, they what tire really when We of Buy

happen? out construction, play a starts DIY gazing. projects are - how is ball Housing finishing that of to but got comes great there's and going they're So in going it to crystal to many lot when they've new

manage to and think quarter. third But quarter one focus we we're you the And can control. of is going we it's we will insight. I more give do generation, on informative, April updates be get is cash conservative, really as the what through what

Vincent Andrews

Okay. pass along. Fair, enough. Ill

Operator

you. Thank

Jeff next comes go Our Please Zekauskas, from JPMorgan. question ahead.

is line Your open.

Jeff Zekauskas

up so about it Thanks very you was and money you you make maybe in million did the And million, I a fourth talk can $XX-ish Chemical are What think much you $X there? the doing right $XX How over much. on in dynamics? sequential were quarter. basis? Intermediates

Mark Costa

a businesses. commercial how have day products and place optimize we market things that right our team best support possible price every the it specialty to at engines great optimizes does there every and big that Well, our

remember, excess capacity into the got role Intermediates going to Chemical specialties. clearing isn't that You've is the

factors. in from very strong it that. QX. a We have off really doing hats driven by improvement that And four It's And my sequential did to to team time. dynamic a QX was

growth. volume strong was first The

strong - we in in on been a lot fourth depressed. last quarter pretty So improvement ag, destocking market saw There's the alkylamines, of year. had going that in

The high ag segment. this market for are margin came life. back to products Those

also that was a other plasticizers so strong markets, quite helpful. But we saw lot and demand of And a others. few acetyls, in

improved all that the was the volume of it. biggest So levers the - driver of

of The second was lack a shutdowns.

So last we fourth shutdown going in the and expense that A quarter. of was third had year. in a the on fourth lot quarter huge

So we didn't have that.

in QX. $XX from So benefit that million a to was QX itself

third an in The spreads. was improvement

So we were back XXXX. where in to being spreads got they our QX about

a was QX. from of that So improvement bit an

the better Some the was started they in we benefit compress cracking but licensing. March, And January got in Unfortunately, of to got of February. that. bit it last spreads, a was part the and

sort call first a in smaller licenses we fourth a of we of program was robust the had So quarter. installment the you that got say we part told that first progress. and those in in multiyear one we the January, quarter our but I'd driving story, of were on licensing

to as then doing more looking next There's have a when we into years. we're that portfolio license. as of that come of we we've the go complete we - couple year of licenses this said, And at

the So it line was of income ran good. just well, and sort was on great statement assets Jeff, every success, utilization of the

Jeff Zekauskas

you when being April operating the company year? those headwinds earnings for as whole, are about the are for down much of what that the remainder you tailwinds foresee? representative or year-over-year? talked Or XX% And down April how by sequentially the a How was

Mark Costa

was first, hold CI Well, a up the slowing And it to did into go with question to to components QX. unfortunately, regards April, there, really volume, key the to like we year-over-year see not And as COVID-XX you quick up story, sequential. markets headwinds the is strong. continuing some impact, do We to down. hold going in one different on basis, be just QX. certainly and that [indiscernible] see take store, it's similar But

end into we're go that Our these about. chemical needs markets do talking face headwinds that

in oil see to going would, current they're available. export of to multiple the to North serving a sort we those totally So Asia on sort would of with we sort run of export full. And of capacity, environment - what is pressure markets situation, markets, European excess lot that after Those the the markets. assets as demand markets aren't American,

Asia still really hasn't great. aren't to life. the come back Margins

but margin that's of So this you got that volume sort of - some environment. a volume, export that restricted it's bit current low of in

will volume reverses So [indiscernible] being the a as be of a outside means - bit unfortunately, of headwind.

models, as second have is, are into we go them, more and spreads part quarter. the a you the I Jeff. And know can challenged you run this bit Cracking

going engines big we're due headwind from per to specialty. these we'll asset And the unit decline Longview impact so that. as occurs utilization a two sort slow specialty well big down we have in bit will and And headwind then in business, the of across to - lower we'll feel cost with CI and as complexes higher Kingsport that as rates that of

that. it So feel of a will bit

So into would sort CI. is, business. that QX neutral go going on on of factors corporate this to but note positive, decline as will basis, a with a oil it see meaningful an to all we you're have impact those I with

Jeff Zekauskas

Thank you much. very

Operator

from from Our comes next Fermium Mitsch Please go Frank ahead. question Research.

Frank Mitsch

reading as Greg, Good prepared morning, were the prepared I yes, helpful. remarks. remarks And was the

a $XXX reduction that X-year $XX $XX that Can been $XXX that, year. outlined the accelerated at this and cost over million this into? cost going savings in to front, That's get How that falls to million the million you On going year to $XXX had how are about period. you you save were million are to going to buckets million talk up you XXXX? - build to you

William McLain

is This that Willie, lead Frank. question. Thanks, I'll Yes. on and

planning highlighted we're way as in that rest QX footprint of our think the for late changing becoming you to So already Mark's about operational and and focused here how cash - on year. the run

us, contractors et of that Also, It level scope on the it, of call changing the of I'll some reduce in maintenance, results cetera. site. enables the to also

to is discretionary Additionally, another key lens spend. that

as consultants stopped have services through reduced third-party you We travel, and think that.

factors. So those are key the

you as we did some was about small Also, a that, get QX. benefit in that It of think amount.

$XXX year. and in be the We reducing in rates, about the probably third expect second our million. of plants only third will And half of that to that the a increase offset impact the the to and operation QX of remainder QX partially in the idling then would be

Frank Mitsch

think have what As more I of lot that is site. Willie, I point, At it think back you - going as contractors some you said, on a like are to transitory. just about sounds

travel, et to going are cetera. You

dissipate versus So of should And this $XXX be beyond? we kind million thinking reduction plan? as XXXX that a your then will about XXXX previous and in

William McLain

of highlighted with the that on functional half second cost $XX million. structural accelerate year-end improving on call for and long-term of the looking our But $XX that well be And a the to operational as as transform company. conference correct. million for the term. to you're footprint We're Frank, our are the we So focused long going the to year, we

the near cost front has pivoted had we fixed normally variable. what the actions In made term, the temporary on and been

in margins across they to strong that and will offset come than of that some more But have and variable AFP, our with we have remember, Materials Advanced those lines product obviously back. you spreads. And specialty will

Frank Mitsch

All Understood. right.

Mark Costa

savings. keep It's demand much, add, back if come extend Frank, we these doesn't that really can back. good a mind just we portion important to recognize in to will come

than even a assumed through we've difficult more time. to ride longer currently For what

to learning and that can think a we're so cost operating operate I long-term our side, and be we work-from-home in flip how embedding efficient about lot how this there's the our thinking into different environment On modes, we're improve structure. about

go half And well we're as that intended back more do we accelerating escalating next to of the this as million-plus of and as $XXX what get program we certainly year. year that to on into

emphasize, actions programs. this want of our what is a Key sustain is there's innovation cutting activity, our of second none I to we're taking So lot through though, cost. we're thing to phase doing of

this optimizing we So are for environment.

with focused to the that on growth markets of continue actually out own customers place kind Through with that sure lot when getting to We're to innovation, customers. our actually come we but We're cash, making this a engagement back of as long-term also we focused have on life. to create strategy have have very engagement in come we of still a are strengths, today.

of that had content We've already Nalgene, wins brands of speak, just got Tritan getting two that. content even the innovation, of seen in offerings, recycled our product resistance virtual largest we and and the - recycled we for great to of launched. On food chemical bio have We're power as ophthalmic of can on a wins where adopted. content, wins. cellulosics number manufacturers Camelbak a product recycled and continue half BPA. on packaging wins this toughness couple big and have environment, a we've got We've Tetrashield get we've three for their even sort non-intent in other half

going, is news good live. is very bit every those on other We're are focusing still keeping aggressively of So cost. but programs after going we still innovation

Frank Mitsch

so much. interesting. Thanks Very

Operator

ahead. Our Alex question of Please Yefremov next from comes Keybank. go

Alex Yefremov

free morning, join Good supporting I everyone. you. Thank cash prepared the flow. remarks. would everyone Question on

dividends. You have about in million $XXX

in in buybacks. You said million maybe than million $XXX debt repayments, substantially more another $XX

can it's more than about your this that million free floor cash and substantially kind $XXX we year? $XXX for flow say the really is So of million

Mark Costa

that me yes, let So question. answer

comment. market expected just want on a to I And start it. bit the back We little

know earnings we what make quarter. we the of to assumptions, in modeling doing demand of year. for position and we kinds are have understand of sort recovery happened not scenarios everyone unpredictable. obviously, coming And That's are guidance. like pulled in April, rest but else is to is of what's second the the - out the we So some different why the But

We the of as trying shutdown through is we and economies diversity see want do us emphasize quarter a complete that for believe second help very global mixed it there. life in to that The be huge of XX% the in quarter see come quarter. these a I this to to people with the there's indication the toughest And this to back markets and side. that's the of stability start stable now, offset will textile that's lot maintain a sort lot uncertainty we is that XX% to have of stability. transportation, We stability. providing even price challenges do will

the So quarter. great we saw first stability in price

We into quarter to price the expect the second specialties. stability continue in

are there oil said, continue and sort year. I we expect positive the of And is So as neutral materials would for overall event raw from portfolio. getting through benefits the low some that to a to

the about focus know we is what markets. all can what great In what on that we that's have So do we to uncertainty, control.

cash can And is more earnings. cash of of so what we outside a generation our control so lot

very when spread. or saw the COVID We - to get close going make of markets or And cover quickly China with to we we fuel keep it. them March sure idle our lose innovation our really to the we will when moved don't worse all do going can was with acted so to doing campaign we're plants our customers, share, everything We've this we quickly we of recover, stay outside in utilization. so -

doing purchase of raw in to ramped down, of inventory back So else that. exist a of great advantage and could and we the take demand everything we does so pull really job that we're what plant material sort

of we on and the second on been number reducing flow capital with million XX% and $XXX $XXX described, all the side the quarter will $XXX really think And cost that actions million So into that about cost will working million, CapEx released. $XXX million.

that levers we're pulling. of lots So

us, great dividend dividend. And that. delevering, going we believe than to $X priority. for do think that, do is we what the at focus, increasing strong And recovery a We're can very cash the we which economic greater look than if run obviously, in over been so and flow. the means we slow free more. that scenarios, And there's do billion recovery, It's upside. our to is we when It's that even on is And our a decade. obviously, can pay substantially a better of our

lot substantial be pull, if right in need cash it's that when so we're it's using we our levers say the to costs It's harder So and substantial, progress that need pull a pull we're engineer to to and should of now. can can we we But But in reverse that people a we can trying we things on on try going what delevering. to, to. make not do flow – inventory harder operating even if that cash-centric strategy we're we earnings.

Alex Yefremov

materials, healthier to helpful. very that affect follow-up end will you spread to related your than, headwind in or should But just on on and year, let's on of if methanol And your be view that, the year? Understood. we terms a contract half your your margins. to margins, back price spread say, expect of us level understandable quarter? volumes even update by first between Mark, it's that could at raw the of this the XXXX And

Mark Costa

Sure.

contract Willie first So let and of question. question, I'll take that the answer part I'll the

to our have there. the improve of do expect raw in we the Materials spreads that Advanced material in spreads So we specialties, tailwinds

of the out you, we two material we of to declines. for the separate sort relative good improve stability third raw as price spreads with that With expect AFP to

I place very is, that areas, earnings for I see some where benefit. think All we that get And those we can cash so in the spreads and all a steady year. additional Fibers, think,

Chemical it Intermediates, but challenges competitive had of half we got more I the year this see a don't spreads. of I'd sort we've the there of AFP, to And in the get the better but lot lot relative given said, We third we adhesives, XXXX, spreads, as some on to expect last don't dynamics the going spot. in The second to that year. challenged it getting of at it's half in a back say, tires be levels stable worse

crackers Something this topic bit our and there oil companies'. the other note important to different is are than a about little spreads

past. not at it's challenged nearly as the as was So in it this point

'XX to ethane let stranded had we huge had we the and stranded XXXX, tailwind and So oil also really propylene cheap. in U.S. went gas that when and be a up

centric from. make You they that's we That's exist. specialties what propylene got to why remember, because our crackers are

So we're we produce, And in our of we much reduce even of of the replacing that, more with to the the propane-based - we crackers. on some NGL RGP feeds investment made top amount ethylene further RGP.

So that changed the dynamic.

So ethane, we're it up propane, now to is now reconnected X% XX% isn't capacity export oil market. propane to right? XX% to anymore, XX% And they to so XX% RGP. through but export XX% the to stranded propane. XXXX, remainder That's the stranded added So much about

propane spreads RGP ethylene to a are correlated lot to tightly is ethane. So very connected more And propylene PGP. than

example now. is to with nearly low the as going a still its an and in we challenger, XXXX, oil back it's be not So but XXXX faced that volatility have the challenge would

it you of environment. be So spread we is in will all pressure a spread we're better competitive last spread. competitive in CI. on to be year. of margins good it a this It's this challenge net, But when year than shape really cracking some these bit about together, some that's sort have of put than in But spread more about intensity sort to going

William McLain

We marked the contract to had front, quickly, in is that follow-up Okay. highlighted Mark, market. we on transition, made just as January. to methanol the we

on methanol cash modest I slight well exposed as overall. So on and it's as actually headwind and a But tailwind a actually earnings gas natural to market. say coal-based would we're

So well methanol on positioned the front.

Operator

you. Thank

next our question take David Bank. go Deutsche will from of We Begleiter ahead. Please

open. is line Your

David Begleiter

businesses just decremental morning. about you've looking at thinking think the in should about out utilization headwinds asset margins the called here? specialty we QX, how Good - Mark, given

Mark Costa

I'm that going take one. let Willie to

William McLain

David. Yes. Thanks,

we've energy On lowering that is fixed how and the as a of and margins focused decremental have as of lot cost think that in previously the AM, specialty margin as because Products. Additives that's our utilization. And about fact have grow. - able front, plants, capacity end & markets, been that we've on and Functional through predominantly that leverage we've about grown. transportation, And Materials shown talked And premium to they've is we're Advanced and highlighted you the the idled the textiles products

So focus as of you a environment. maximizing in in the generation on this bit here little reducing we cost reverse and expect can QX cash

recovery little AFP businesses - then However, A more that & slowed you the bit should for whereas that expect between those as has bounce is it of and back. Additives Products Materials that contrast plants, fact down. demand recovers the has the would AM on idled Functional these Advanced

the that specialty back, the year. involved and worse. cost fixed fixed result the true, linkage more in those half come there given in see streams, across are nature those decremental and margins variable second - Additionally, the being margins capital to to and the product the we in reverse of the specialty When lines that is costs and would expect

David Begleiter

Mark, sorry. this - I'm it. on just Got And

Mark Costa

ahead. Go

David Begleiter

Yes, back ASP you highlighted made the of just progress you on that in that alternatives or initiative? third process, October, on that update strategic any

William McLain

parties impact and And this follow-on. obviously, environment, done Mark me can need on We Yes, focus interested first, let to now. a to the of earnings but difficult it's pre David, go the several transaction COVID get we event. had

these right now soon those. We businesses decisions also to footprint and in on on manufacturing focused and are these continuing evaluate restructuring we'll our businesses, have

focus Additionally, can the we out such other other the cost actions COVID take businesses. on with strategic we're environment, can these taking we side on that that of

Mark Costa

I to process add I beyond activities, a going view. surprise asset be point from the not thing and So is just want and a parties quite footprint, to we'd we actually The aggressive intend challenged about decisions of of that attractive sort there that's innovation restructuring exactly be the actually to soon and hopefully make here very potential interested well. some our think

than the Crystex more marketplace, is new superior thought. a is of in that our the far getting adoption we So competitors' lot to

now That's one this running plant in well that's tire right environment. actually

In fact, because rates of increase to we've for there demand had the it.

a So and attracting that's helpful price. better it's good still difficult that market see is tires. and But at the it's the overall in adoption, attention innovation extremely is encouraging. to Obviously, and

validate to once MNCs value we've to adoption of Same new odor-free, wanting with lot We've getting launching is the innovation-wise sort And differentiated again, tire seeing and new our of a UltraPure, now is set in couple and to move those true and in been even a resins. right of trying forward resin had validating even over that resins. progress VOC-free virtually, big tire programs. in the a in context. And adhesives, verifying

people. innovation's as It's and have of well we restructuring the making So part while it important. the as business it to it valuable other all improving more

get have So through to to we're this short-term going just environment.

David Begleiter

very Thank much. you

Operator

Our come Please PJ from ahead. next will of Citi. question Juvekar go

Your is open. line

Eric Petrie

much it's morning, for grow first as How up by Materials were well displays? Mark, products quarter? Or there Petrie in interlayers actions and OEMs Advanced premium auto on Good as did your head destocking for Eric PJ.

Mark Costa

Yes.

So a story between a split bit it's business. rest the of auto the and of

the of So one [indiscernible] thirds revenue Materials, third really did of two of well. the Advanced revenue, the only is

in So lot we gave of different volume had growth in in the strong a especially you more engagement, category applications, stable we that slide.

did of that's packaging really well. inside consumables So

is materials part very important one earnings. strong, stable that the well, We about advanced a had big to It's think medical. decent, in of third our automotive

create held actually that continued Tritan durables consumer its is market up growth. well to largest second of because The own

reasonably good. been actually that's So

well. relatively largest this I architectural, doing mentioned, The medical, very well. there, is business and very profitable third market is even market consumables, holding The Fifth for stable, fourth is stable. up these

stable. earnings up gone you that's why and and be of all fairly well So saw

was whether good very obviously, the AFP AM, called is a portfolio margin of $XX Actually, demand. of of headwind escalation February. saw it really $XX then, is came related, in March EBIT we of out sort That to really which And it's demand demand we related. the transportation COVID or high good was saw part company, entire off our and March. obviously, January million and with in that we million in Automotive,

So we felt the that impact there. demand on

good was, benefit utilization So holding prices up up quite asset came overall, held it's the a quarter. except first general, to well, Raws the And well. in for for pretty transportation. the pretty And in quarter. be in

really until seen of the get business this utilization impact second haven't the We we in quarter. asset to

Eric Petrie

by quarter volumes coatings guiding declines? you companies And third. secondly, down some expecting one Are second Helpful. similar and then are for paints

Mark Costa

We're dramatic would So sequentially. production going a in saw. XX% be assuming as see you automotive coatings, expect decline, to is pretty down OEM to we

and automotive that So track large be coatings's a headwind. to quite going

we're architectural the to we side, better on the customers earlier based I other what coating seeing be what On heard seem say, that up lot this have, week. holding coatings and a

number that a bit think I So of you're blended quoting is number. a

tracks We architecture have OEM. of and - have auto very sort between two different markets that OEM

Eric Petrie

you. Thank

Operator

Fisher Our Barclays. ahead. next from Duffy comes question go Please from

Duffy Fisher

of AM products, walk so Within where Yes, and the they even products your lesser will can maybe of on chemicals they base off AFP And lower good with price? their competitors kind your morning. harder would segment have quality oil oil? if push through segments, you this environment

Mark Costa

Sure.

of of the ultimately pretty outside of material a sort products, is lot drives oil segment entire much - Materials, the Advanced cellulosic So the for costs raw Duffy.

And so area, potential. that that you in have

right? far, was all So we've tailwind great year, seen all price last year. through stability a Paraxylene last

in be and of many as don't going of Prices the clear, all we're have you share give we've been respect You've with and do your to right? to back. the said treat that. Starting past, holding some to raw calls in up it, some got material on hold customers value, To well. relatively to

But from still, quite well world, And to can where think pricing. of it's up competitor going in got lot I a things we're see. what Tritan, hold control over the like only net, the we we've

Interlayers markets. auto-related contracts. the annual On is

prices got established year. So those last

it's to they then stable. films, to price movement And So raw lot performance it also have don't the a them year. within materials of when very comes in

it's a remotely that raw connected consumer pretty materials. not prices are value in our present - there. is films They to performance stable we product, and The

a but up So raws, down say come hold prices really overall, that well. some this it's bit with to going year segment, I'd have

AFP In two go you that called third to AFP, we of if the out.

expect to So year. coatings, price stability, has last good ability Care price Chemicals, year through that's specialty fluids, this actually cetera, good crop, going good to price continue pretty had it to have really et have and stability

But all we'll that cost point quarter, impact. an cost for of first of contracts be in There some some the view. from coatings of raws, but Chemicals will example. and as on pass-through stable, pass a spreads as about those we for long-term segment the the of overall which see the X% you'll X% that That's those the pass-through in is some are want end, contracts Care

also We in third, some stabilized. that's of of sort competitive They behavior will competitive last got the see end back one tires increased in price but adhesives year. by very and the

to lot spreads don't a are this think to I compress year. going And more from that

prices So totally know, year. say you will where this either And overall, environment. in or think those at addressed. for neutral I'd improving, shape CI, X% be different, And I've that we're as down is I even already in the Fibers, that pretty to good portfolio, in Duffy,

Duffy Fisher

Sure.

think you stronger going - said And than was transportation less prepared it remarks, your bad in aerospace. Great. comment where it I was a you I if be don't or to then in tire you know made Okay. thought demand

So your you kind that than segments of business? inventory talk those just tires that it can those you think call transportation different may is skew some is in will But there through that on Or why how stronger a hits markets? in aerospace? be

Mark Costa

X. say all we Right. when transportation, Duffy, it's So

about in when always So aviation. it's reference, we autos, talk transportation, and tires and any

three are about more market. What that all and aviation OEM. very being a than say challenged is So comment challenged is, tires in auto I'd

flying And right go So is obviously, back cars. no the to of now. rate the but think of slower can rate going external you the data, buying flying I get than people come ones's people

cars get transit. mass in upside cars, [indiscernible] car see wants here to way, could of towards is thing sold that their the behavior by end own back versus mass could initially in this who because on an people right And as shift being more the We now. transit their be

much side just but very But into tire It's is off. an side We're side, replacement our - the not refinish that but is one's forecasting, not might off it baking - OEM the no the tires demand's upside. because be obviously driving.

overall down together. net, is all so what is you of that segment see XX% rolled And that

Duffy Fisher

Great. guys much. Thank you, so

Operator

Matthew from of comes DeYoe of Bank go question America. ahead. next Please Our

Matthew DeYoe

hear a it only hard I was a or prior question. believe we ago you're to but to doing little well. a to were It's [indiscernible] Frank's at Glad bit gentlemen. so touch Morning, little months on couple - wanted two maybe

looking mentioned more for the you're the second structural of the You had savings. of year, half

savings Is in so move footprint optimization a we million it if structural through those And still cadence talk that be perhaps little Is an as we $XXX you Would of upside? Is XXXX, bit on now? costs? larger XXXX, the that those that? included numbers? stickier about can about think asset in announcement eventual

Mark Costa

Sure.

the temporary is very back a to if relief back going lot you'll comes by So And of way, variable be to it's come demand. revenue that very happy million, high $XXX because cost that margin for the with it connected it. obviously, to pay has

The those we be temporary off. the coming said. is we'll celebrating structural side, - what costs So think, I but

out et opportunity on cetera, that than we'll comprehensive to we work chain, and refine more going is look So an an we it. supply more project program operate extensive, discovering inventory have analysis. take operational at to a management, of of significant every manufacturing, going And on, you we transformation that costs, on expected, as we from work lot on give element how insight

of asset long-term it increase that well the and will back that helpful to this year a as of that, Singapore where about annualize material include into escalate It has address $XXX rationalizations. that excited we're year. as benefit And our going next more we plant, So that million into does goal benefit. for you would we're real get told our to some half to and us allow

at tire asset Obviously, optimizing decisions the around with footprint, make situation, tire footprint, some that. our and we'll we're looking

and combination a to more rationalizations, maintenance, going SGA operations lever the operate, that of our we're of better as well really is it in and look chain couple supply out improving over phenomenally at working today. better operating how too And years we we optimization, efficient and built every pulling last make better that's figure model well network commercial as take and we got. how management, business decisions operating developed how So we've asset

we And that enable some see - can efficiencies. will if

Something mind inventory or It's we're flowing back from keep reducing about of bunch rates. into else I'd in said being cost important out half running note just expense. and that as of their severely That to Willie to idling plants a our going and year. changes this a period something from facilities the on that run

to a expense So costs be quarter in period significant see opposed the second to of sort conversion pretty in flow that quarter, charged will as normally. the on you're going hit of

to be year becomes we're hit mere a benefit So image because this but conversion for year down actions going all half of QX, with cost our in that the the will it total the taking. second is

because quarter of shows to - by so sort when it second to the be up quarter. aggregated than timing it's any very year of into different other is the much But going going

reversing of basis, period coming So it's no going XX% even the We're in. half got to because we've charge that million on longer you sort a second also of, have this $XXX if in will, inventory.

benefit. demand as comes So level back in half see the you're of at QX, going as that versus long back some to year the

that the that's reduce accounting of actual end in of you we're top that So on there's number taking to cost a just all mind. cost back help actions things got the to keep

Matthew DeYoe

in. can guess, I find helpful. And if I more one That's

the price polycarbonate significant which against pretty would X, And I You Tritan, but is compete of deflation. we're the seeing case, you're does imagine, producer SAN. mentioned and the some frankly only product the other

Tritan at that on before? Tritan change proposition the higher growth of as back product does So than we maybe end the possibly value here? peers limit has out all and the price move and of Does this versus

Mark Costa

Yes.

and So a for marketplace historically in has two for Tritan the wins third. it - reasons, now

So specific functional launched into of we it in historically, sort had normal where better applications actually the performance we product way.

an as in polycarbonate better these issue. BPA applications a performance Then, better starting then point. and So resistance, medical applications houseware became of course, chemical

and in up a BPA lot polycarbonate's free a have picked share stability lot not. our of we pricing we because of So and

is compete it's in do. the breaks that helped anymore all and doesn't us but it polycarbonate there, what drop a San we're don't out have against at really we to it, So we toughness you lot has really the - in. allowed not brittle applications compared if

downgrade. it's So a real

styrene. go to And that indicator, worry want now leading as especially to starting Europe, you If - are product. to in about a people starting really

So lot styrene-free solutions. want brands they we're of that from getting a conversations

us. also helping that's So

I sort that which It's core added I in chemical significant product, be recycling, recycled products no or content performance think going or it's entire content, the compromise plastics we've - content to of the really identical for portfolio just a thing other third have is the can these then cellulosic, copolyesters recycled to ability whether recycled very whatsoever. even is And in content. specialty or now means add we recycled put has through all and Tritan

earlier. So we're wins, already mentioned as I getting

and or the a of in take actually sort vessels loop environment, fiber. where adding product another into back that's same products it even straight textiles that hydration out of offering we or plastic value whole source cosmetics on other over and of and from any So back solutions taking truly differentiation can level to circular

So differentiation. lot on going to help us continue our

Matthew DeYoe

it? market Is price finding you for you catching content? on there Are that a premium? are to pay people up recycled price Are that premium willing

Mark Costa

spreads to this. We're to not And this customer discuss That's now. that and to basis. equal by is will our customer or better we're to that going be But than a a cost our right current value a that there - spreads. confident

Matthew DeYoe

Thank you.

Operator

Thank Partners. question Vertical Please go comes you ahead. Research next from Kevin of McCarthy our

Kevin McCarthy

benefit relative a the I expand had magnitude revenue wondering a you Mark, could licensing that did some activities. what have? Last of discussed it of you opportunities A on Was if quarter Thanks. morning. to the in bit much couple chemical of balance the first of ethylene quarter, source does glycol of in-licensing. like was good questions market the your look on contribution? the Yes, how for quarter the the first And you year intermediates.

Mark Costa

So one. I'll let Willie take this

William McLain

Yes. Thanks, Kevin.

being, as in licensing we think call said that this million get million than a little think it, revenue I said I'll first is a modest the amount bit see a over potentially million roughly you $XX we X- more we this. you additional would would in the what say But less as we year period. end. as January, expect second about would the the of hit of So year half And low we about installment to on on can $XX it $XX milestones. we

Kevin McCarthy

called then volume chemical think Mark, factors there. out intermediates, you And in different to Okay. with I regard four

curious sanitizers demand I Or sort ag. in mix? volumes strong from was COVID them you was alcohol. any too there? isopropanol into of of in or that your matter small Did see is oxo about a One your to related sort boost of in volumes

Mark Costa

there We boosts would matter. holding it in of the markets. in call up well mean, a some certainly these area. see I are stable propanol too I some small demand relatively

benefiting And it from those markets so CI, I where are their products into wouldn't call stable But it. going are offset. significant

benefits plastics, those crisis that's where store, those more if you consumer, applications. person is positive side that and the the checkout real parts in specialty COVID-XX of The we're grocery the on face seeing see and the heavy plastic barriers going the sheet we're gate into up barriers, shields our into the goes between

what more So et you're seeing amount growth section benefits places stable cetera. see called AFP. in certainly are so and market smaller But that we we map. a doing lot of Pharma, there on in some well. of out strong relatively some where is that Medical obviously in of that.

Kevin McCarthy

color. Be well. the Appreciate

Mark Costa

you. Thank

Operator

Our ahead. next Blair question Tudor from Hold. of go comes Please Matthew

Matthew Blair

side everyone a your I'm morning. of as propylene, hear specialty having to on Good side safe. of connections lot Eastman commodity We as of both is glad think well business. the as to

refineries what on source you about rates you are have key of lower would guess, global refinery expect would that I run talk could a any, Eastman Given here? propylene, impact, if

Mark Costa

Yes.

compared the price. hard But little out spread, PGP is And here significant we such degree. well. in the So to expect see therefore, off reasonably to refineries up a better second the propane maintain oil, that to to amount. on of to a help It's the holding the that well quarter. figure price relatively by ethylene PGP up is reduced But holding demand a like do rates a yet it's we

this helping. But in spike up wouldn't to point overall cause think going is. don't that's I So macroeconomic demand I at - it's where a propylene given

Matthew Blair

And replacement looks little like data, on the based bit exposure Previously, in rather I then in it you a than you've in holding your OEM. replacement areas is to was OEM. like about And hoping more the talk commercial highlighted tires. dynamics March could better than

OEM? where is reversing want clarify, these that So you replacement is are to head more than softening markets as that QX into tire I just

Mark Costa

both think and Well, is across you've the I our position everything soft, our them right? of in do, that globe, of market higher serve I expectation softening, they're what majority think So Crystex, there seen given vast is the PPDs. the customers tire plants we

we about And April Europe. you we good So and down in by them plant, when a U.S. pretty in track XX% have visibility. line, by the of got shut

China, on of activity. mean, like we're there's to doing as but are life driving in channel, they're Obviously, if like cash combination OEMS, It's well they're starting demand uncertainty their a people as it's focus if all shut to generation come down. to back limited destocking I commercial

in just less the here tires what people There's this with period going are run term, going place. of to shelter needed they've short especially in in be got, replacement to

places, I to life. far back There's adjusting to back on that. starting Seeing now. that from a few So think that turn a few all but they're plants are we're come to in them seeing

But do anything nothing a a what in the like in to sure, or for be before. think normal now stable I But time going even seen is we've recessionary sort normal more just OEM business, is replacement right time. in we're than of

activity like light commercial right? et recession, or service retail right, stores, The activity. all not It's on went a cetera. just off, Everything

declined work applies a lot that's refinish, even So too. we very that's now, huge auto there's to where that our but just normally, obviously, way to a change have stable, mobility in through, right

Matthew Blair

Thanks. it. Appreciate

Operator

ahead. Our Sison Fargo. Mike of Please next from question comes Wells go

Mike Sison

Morning, guys.

it's sound whenever things over since better. but volume return, normalized more profitability get think Where has or margins maybe if been you a get to guys while that? well volumes back do Well, and You environment can all to hopefully, get Mark, a time, a tailwind, been healthy. can we on

Mark Costa

we where really representative back up. were, we the margins I certainly then of by on all got going think get I we when you that can't you look be Those war were think, where before and if way I started then quite that had this and and to company as should mean, make - trade XXXX, that we followed to attractive forward. back a the COVID-XX,

that or margins third fibers. attractive thirds uncertainty part one of have AFP. stabilizing AFP and we're in part the the two won't obviously, any reason see of There's - don't I the So in we two and CI obviously - that thirds

back I think we that and it, XXXX had get as to the not no So look performance to that there's at we back then. reason

Mike Sison

And Got mentioned neutral. be of part about was of portfolio, they're felt I chemical But you a is much specialty it's at would as smaller you MB, quick prices a your thinking It. larger. kind follow-up, your where I think business oil much

businesses? and So be why your a given wouldn't oil of lower for more the raw other beneficiary materials prices

Mark Costa

think it was and is, of I I mean, earnings XX% in right. CI XXXX. our Well, you're

not our story. So part a significant of it's

markets. You've reduced price the volume, which got their for it's because as normal they the low, export can of all compression clear of are difficult volume. to the You've oil price at, Normally, got this they're so where on because part spread access effects is not that segment. two competitive dynamics, of oil at moment But well combined the is as right? more CI sort the

little So Mike. the is of combined is you bit Than normal, more will, extreme. sort what effect a if

impact benefits remember But positive we'll pass-through business us. is you cracking, It's for business specialties it business the going the making cellulosic. small look there in right? So not relative across it has. all the is, important really I markets. Peak actually think, Demand to a of is contracts. a stable. It's portfolio get quite in amines cost whole just the well ag the when is in and to net, yes, a that, our Almost also the co-product is ACO really all acid it's

America we're spend time don't that's only on have. that But primate stable, predominantly it. North relatively much too, we the only because asset we So it's because

in more so than bit a little those are margins are stable - And they are here Asia. prices

a So to right. it's going Net be overall, but it's you're a tailwind. headwind,

Mike Sison

Great. Thank you.

Gregory Riddle

please. question, If the one you next take the last

Operator

come today Please question Our UBS. ahead. go John last of will Roberts from

John Roberts

to you've And expecting capacity smoking actually been the flexibility going glad on transitioning obviously Fibers for given is Do while. a mark was the activity well. you any hear here have of stays there. one's back tow towards quite is you I'm all a be over weak some pretty upside cig And here an question cars, observation that quarters? But few Thanks. which if my to shift next no to the strong to interesting apparel,

Mark Costa

tow we that John. serve business, So Well, to still be to stable. The back, market. in serve It's not stable is a capacity don't place the we tow we'll have sufficient to it's shift market the have very right? growing, and

was We range. is stable still the expect this meaningful volume And rate It in we market X% And with the X% to stable growth back don't declining yet changing the any way year. be XXXX. pandemic. tow see but in to associated that in

completely supply capacity it's our is important enough our we customers. serve that important And So extremely is to cigarette sufficient have serve customers the to capacity market. security there because that to

textiles rates align we're the to those with textile So is going the be capacity reducing repurposed demand. the facilities towards of to materially

of associated growth. second utilization and we'll in our have lot a own grow see So But ways still the headwinds with that. create asset some we quarter to

content, not to adding expect bio to some going plastic But will other sort really of mode. certified the be now recycled proposition to half of been sustainable I recycled the again. NI Obviously, out in content, of half offering when value going still that's from is And we're by to buy past environment. strengthened we get need a ocean our come Bio force, of buy place the and are right? our out again, clothing the shelter cars fiber some and people content taking a that, So and has

They is proposition a into benefit the very in it's potentially now. third it that's ocean, for have get this very the we compelling a microfiber, want washing market the much right And even certified when biodegradable. and in And breaks value machine it.

an allows . in offer create there's some as this of that us of trifecta that got we've long So amount as space demand. growth to

John Roberts

Great. Thank you.

Gregory Riddle

of for call available this us a audio everybody hope will great be Thanks, on a morning. this An day. joining bit has this morning. website later Okay. little I everyone, our replay

Operator

all you call. your conference today's conclude participation. will This Thank for

You may now disconnect.

We use cookies on this site to provide a more responsive and personalized service. Continuing to browse, clicking I Agree, or closing this banner indicates agreement. See our Cookie Policy for more information.